UDA, Eco World, EPF to develop RM8b project

KUALA LUMPUR: Government-owned UDA Holdings Bhd together with Eco World Development Group Bhd and the Employees Provident Fund Board (EPF) have entered into an agreement to jointly participate in the development of Bukit Bintang City Centre (BBCC) at the former Pudu Jail site, with a gross development value (GDV) of RM8 billion.
To facilitate this redevelopment project, a special purpose vehicle BBCC Development Sdn Bhd (BBCCDSB)will be set up, in which UDA and Eco World own a 40% stake respectively, with the remaining 20% held by EPF.
Sitting on the 19.4 acres of land, BBCC is a mixed development consists of strata offices, office towers, a hotel and serviced residences and a lifestyle mall that includes a Malaysian Grand Bazaar, a retail mall, F&B and entertainment components.
The entire project is expected to span over a period of eight years, with a gross development cost (GDC) of RM6 billion. As the owner of the land to be developed, UDA will charge BBCCDSB with development rights of RM1.01 billion.
Speaking at a press conference after the signing ceremony here yesterday, UDA chairman Datuk Johari Abdul Ghani expects the construction work for BBCC to kick start in the second or third quarter of the year, as soon as receiving a development order, which generally takes about six months for approval.
According to him, the first phase of the development will be the lifestyle mall and strata offices.
He said the lifestyle mall, which has a net lettable area of 1.2 million square feet, will not be sold and it would provide recurring income for the consortium.
At the same, BBCCDSB will enter into a memorandum of understanding with Mitsui Fudosan (Asia) Pte Ltd to explore opportunities for both to collaborate on the development and operation of the lifestyle mall.
Mitsui Fudosan is currently also involved in the development of Southeast Asia's largest factory outlet park at KLIA Aeropolis with Malaysia Airports Holdings Bhd.
When asked of concerns over a supply glut, especially in the office space, Johari is confident that BBCC will not be affected, stressing the consortium is selling "Bukit Bintang and connectivity".
"If you look at KLCC for example, the take-up rate is still very high… If you get the right mixture of development, I'm sure people will come," he noted.
He added that Chinese investors have shown the interest to undertake an en bloc purchase of strata office, reflecting the strong demand for BBCC.
However, Johari said under the joint venture agreement, UDA also has an option to buy over the strata offices and rent it out.
On the project funding, Johari said UDA is looking at equity funding and bank borrowing, saying the group can take on "whatever gearing" to complete the project.
"We've a lot of equity and banks are lining up to see they can come for the finance of this project," he said.
For Eco World, its portion will be funded via internal funds and bank borrowings.
While there will be 50% participation by bumiputra contractors for BBCC, Johari gave assurance that only qualified and experienced contractors will be in the list.
He also said the profits that it will get from BBCC and other annual income, could be channeled back to the development of Kampung Baru, as part of UDA's responsibility for the society.